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Zoellick: Protection for most vulnerable must be permanent part of financial architecture

Submitted by Angie Gentile
On Fri, 10/02/2009

Bank President Robert Zoellick told an overflowing room of journalists this morning that these annual meetings come at an important time for the work of the Bank Group and its members.

“The G-20 summit [1]last week provided clear markers for the work of the World Bank. But more than 160 countries were not at the G-20 table,” he said. “These meetings can therefore ensure that the voices of the poorest are heard and recognized. This is the G-186.”

The Bank’s President told reporters that developing countries are still suffering from the global economic crisis, and it is important for the G20 to scale up support. He said the meetings offer a platform to follow up on the proposal for a crisis facility for low-income countries[3]—critical to ensuring that protection for the most vulnerable becomes a permanent part of the world’s financial architecture.

Zoellick also said the Bank is following up with UN agencies and other partners on the G-20 request to put into operation the food security initiative launched at the G-8 meetings in L’Aquila, Italy earlier this year. That initiative calls for the injection of an additional $20 billion in financing for agricultural development.

Zoellick remarked that one of the legacies of the crisis may be a change in global power relations, saying the latest forecasts show China and India helping to pull the global economy out of recession. He noted, though, that other developing countries are also drivers of growth, and that a multipolar economy, less reliant on US consumer demand, will be a more stable economy.

Given the evolving new multipolar economy, Zoellick said, “the Bretton Woods arrangements, forged after World War II and patched up in the decades since, look increasingly outdated.”

Also on the docket will be the issue of a possible capital increase for IBRD and IFC. The Bank responded to the request made last Spring to scale up its support to $100 billion over a three-year period. “Demand is already moving beyond this,” he said, “and by the middle of next year we will start to face serious constraints.”

“The danger today is no longer of a collapsing world economy. The danger today is one of complacency.”